Chip Maker’s Warning Rattles Entire Sector

Microchip Technology Lowers Revenue Forecast

An earnings warning by an Arizona maker of computer chips set off shock waves in the stock market Friday, fueling fears that the semiconductor sector is headed for a sharp downturn.

Microchip Technology Inc. on Thursday lowered its forecast for fiscal second-quarter revenue, stating that chip sales it expected in September failed to materialize. The company said one major cause was weak demand from customers in China—where the September quarter is typically strong—and predicted that other chip companies soon would feel similar...